On 25 November 2019, the Council of the EU published a progress report on work on strengthening the EU Banking Union. The report focuses on the following:

  • European deposit insurance scheme (EDIS). Among other things the report states that Commission services presented the main findings of a soon-to-be published study Options and national discretions under the Deposit Guarantee Scheme Directive and their treatment in the context of an EDIS. However, whilst the report was generally welcomed the report notes that some initial concerns were raised regarding the policy recommendations in the study;
  • Implementation of the banking package. The banking package proposals consist of two Regulations and three Directives relating to prudential requirements for banks (amendments to the Capital Requirements Regulation (CRR) and the Capital Requirements Directive IV) and recovery and resolution of banks (amendments to the Bank Recovery and Resolution Directive and the Single Resolution Mechanism Regulation). The European Parliament and the Council adopted amendments to Regulations and Directives. The amendments were adopted in two stages — in December 2017 and May 2019. The legislative acts adopted in May 2019 came into force on 27 June 2019. There are various application dates and transitional rules, and the two Directives need to be transposed into national law. While some rules started applying immediately, most will apply as of mid-2021, and some have a transitional schedule extending to 2024. The report notes that the European Banking Authority and the Single Resolution Board were asked questions by delegations with particular emphasis placed on the challenges connected to the transition of the new regimes, taking into account that a number of banks already have a binding minimum requirement for own funds and eligible liabilities requirements in place based on the old framework; and
  • Action plan to tackle non-performing loans in Europe. The Regulation amending the CRR as regards minimum loss coverage for non-performing exposures for newly originated loans that become non-performing was adopted and entered into force in April 2019; however, work on two proposed Directives is ongoing with the Council waiting for the European Parliament to adopt positions to start negotiations.

Further information on the European Commission’s Action plan to tackle non-performing loans can be found in our August banking reform updater.